The relentless revolution: a history of capitalism

by Joyce Appleby

  Despite several very scary episodes in the 1950s and 1960s, the United States and the USSR managed to curb their extremists and avoid mutual destruction. In this they were helped by the United Nations, formed in San Francisco by fifty participating countries in 1945. Given powers denied the defunct League of Nations, the UN Security Council and General Assembly kept alive the forms of deliberation, if not always their spirit. It remained more under the control of the United States than the Soviet Union, but Russia’s veto power in the Security Council acted as a balancing, if annoying, mechanism.

  New Institutions for International Trade

  Some farsighted people after the war saw the chance to achieve a relatively free world market, a goal that had eluded the best of intentions earlier. One of the seventeenth-century developments that had given England an economic boost had been the dismantling of local obstacles to trade within the kingdom. In France at the same time you couldn’t drive a car twenty-five miles without having to pay someone to cross a bridge or pass through a shortcut. The privilege of collecting such fees were highly prized and protected. In England goods and people moved within a single unified market, instead of the local and regional ones that dominated elsewhere. This had been a widely recognized stimulant to development, but national rivalries had nixed any effort to apply it to international trade. Instead countries erected tariffs or filled trade treaties with picayune demands for special treatment for a favored product or interest group.

  World War II provided a new opening for international cooperation. The United States supplied its European allies with armament before its entrance into the war, through lend-lease treaties. In these, the American government demanded that after the war, recipients pitch in and help create a multilateral trade world that would speed recovery and promote growth, much as England’s internal market had done three centuries earlier. Despite its history of protecting so-called infant industry, the United States became the strongest advocate of free trade. Particularly offensive to American producers were the favored terms of trade within the British Commonwealth. Like the British powerhouse of the nineteenth century, the United States promoted free trade as a virtue rather than as the advantageous policy of the strong. The United States sometimes acted like a wealthy, but grouchy, uncle as in the final settling of the lend-lease agreements.21 Such behavior is not surprising. Rising above obnoxious national postures was the novelty.

  The institutions established after the war created a propitious environment for economic development among the countries that participated. The dollar anchored international trade. By 1956 all Western European currencies could be converted easily, helped along by the European Payment Union. Beginning with a grant from the United States, the union promoted multilateral commerce by easing the means of payment. The dollars each country received from the Marshall Plan not only bought necessary goods but enabled it to buy from one another. Accounts for every country were settled at the end of each month, with only large debits or credits settled in gold or dollars.

  Already geared toward consumption, the American economy boomed when millions of families bought big-ticket items like cars, refrigerators, washing machines, and dryers. A change in lending and borrowing made this great spending spree possible. Earlier, department stores and upscale groceries had created charge accounts. One of the conspicuous features of department store interiors was the pneumatic tubing that carried charge slips from every department up to the credit office, where they were sorted for monthly bills. So credit was not new to Americans, but it had never before been crafted into one of the pillars of prosperity. After the war, banks, retailers, manufacturers, lenders, collection agencies, and state and federal officials took the haphazard local lending industry of America and turned it into a coherent national system.

  Americans now had enough purchasing power to pull the incredible flow of goods coming out of the postwar factories right into their houses and garages. From the borrowers’ point of view, buying cars, houses, and major appliances on an installment plan made lots of sense in a period of inflation. With steady and well-paying jobs as abundant as goods, the default rate was minimal. Buying on credit no longer seemed like an indulgence, but rather like prudent spending. By the 1960s national credit cards had begun to take over from individual charge accounts. That same decade saw the beginning of the malling of America as developers began creating entirely new shopping areas, often enclosed within walls with air conditioning against inclement weather. Usually anchored by a major department store, the malls that mushroomed across the country signaled the early obsolescence of downtown retailing. Even in this era of conspicuous consumption, though, creditors continued to discriminate against blacks and women.22 Assumptions based on the separation of a man’s world of work and a woman’s world at home dissolved slowly. Still, female employment began hitting new highs in the 1950s, despite the return to the home of women who had been wartime workers.

  Technology’s Social Impact

  Into the American living room in the 1950s came the biggest novelty of all, television. The inventor of television, Philo Farnsworth, proves the randomness of mechanical genius. Growing up in Beaver County, Utah, Farnsworth tinkered with electricity from the time he was twelve. The first person to transmit a television picture, as he did in 1927, Farnsworth appropriately chose the dollar sign to send in an image with sixty horizontal lines. Although he lost a patent battle to the Radio Corporation of America, Farnsworth went on to invent 165 other devices, including vacuum tubes, electrical scanners, and the cathode ray. Farnsworth beautifully exemplifies one of the strengths of capitalism’s dependence upon innovation: It can’t ignore outsiders.

  World War II gave a tremendous boost to the electronics industry with its developments in radar, sonar, radio navigation systems, and proximity fuses.23 Large orders for these radio-related products left American firms like RCA with expensive laboratories that at last could be devoted to long-delayed television projects. Far from representing a luxury for the very rich, television struck people of modest means as a lifetime entertainment investment, and besides, it could be paid for in installments. RCA, which represented a merger of U.S. and German companies, took the lead in commercializing television. It introduced color TV in the 1950s. By 1960 forty-five million homes had TV sets. Movie attendance took a dive, and radios found their best audiences in cars.

  Widespread ownership of TV sets promoted one of the most intrusive novelties of the 1950s, the television commercial. A natural extension of newspaper, magazine, and radio advertising, the TV commercial seemed particularly impertinent. Television stations timed them for maximum viewing, interrupting plays, football games, and the news. The picture that is worth a thousand words became the thirty-second sequence of pictures that informed, persuaded, and irritated. Roundly criticized, TV commercials succeeded in selling everything from deodorants to life insurance. Soon political candidates saw the promise of television commercials for generating support. More effective than door-to-door canvassing, commercials soon took the lion’s share of campaign budgets. Fund raising acquired a new importance in American politics. Once again, commerce showed its power to shape institutions in unexpected ways.

  Another newcomer to postwar American consumers was air travel. The U.S. government had promoted aeronautic research after the Wright brothers’ successful flight in 1903 but ceased to do so after World War I. The original airlines like American and United emerged from aircraft companies. Charles Lindbergh drew world attention in 1927, when he flew from New York to Paris in a single-engine monoplane. Lindbergh then became a pilot for Pan American, which, like the other pioneering, commercial airlines, relied on income from carrying the mail, especially to the countries of Latin America. During the 1930s fear and expense curbed commercial flying. One marketing effort to confront these obstacles boomeranged. An airlines company discovered that wives worried enough about their husbands’ safety to keep them from flying. To address this problem, the company extended free ticket
s to women who accompanied their husbands on business trips. Following up with questionnaires to the participating spouses, the advertisers discovered—from the angry replies they received—that not all the husbands had taken their wives!

  World War II again involved the government in plane design and production. Like much else, air travel took off after the war. Jets took over from propeller planes in the 1960s, replacing such planes as the four-engine Constellation and the DC-3, which had carried cargo or twenty-one passengers for six decades. Jets could carry more passengers and get them where they were going faster. Greeting the new planes at Dulles Airport was a magnificent building designed by Eero Saarinen that looked as though it might take flight itself. At first jets were such a novelty that people went out to their local airport to see them land and take off.24 The Federal Aviation Administration took over safety issues and air traffic control in 1958.

  Novelties didn’t end with television and flying. In the 1967 hit movie The Graduate, a family friend assails the hero at his graduation party with “I just want to say one word to you: plastics.” And he was right; there was a great future in plastics. Developed originally as a substitute for ivory in billiard balls, cellulose had intrigued chemists in England, the United States, Switzerland, and France for almost a century. Plastics took off after World War II.25 Then nylon stockings replaced silk ones, Bakelite dinnerware filled kitchen cabinets, and vinyl found its way onto sofas and lounge chairs. Manufacturers used polyethylene, the number one selling plastic, for soda bottles, milk jugs, storage containers, and dry-cleaning bags. Soon plastic Silly Putty hit the toy stores; Velcro came along later to replace buttons, snaps, and shoelaces. Very much a triumph of chemistry, plastics carried synthetics to a new commercial high.

  The Push in American Higher Education

  The most profound scientific influence on American thinking came not from the United States but from the Soviet Union. In 1957 the Soviets launched a 184-pound satellite into outer space. A month later a heavier Russian spaceship went into orbit with the dog Laika on board. Both transmitted a beep, beep, beep that was heard around the world. Americans were stunned; they had been beaten to the punch. Within four months the United States joined the Soviet in space with Explorer 1, but Sputnik had already done its public relations work, dispelling the notion that the Soviets were backward. The American reaction to this spectacular milestone in technology is what makes Sputnik so important to the history of capitalism. Pundits and politicians agreed that the United States had to make a gargantuan effort to excel in science and engineering; they agreed as well that American universities, not government research facilities, held the key.

  Within a decade, public and private universities embarked on expansion programs that had the effect of changing the nature of higher education here and elsewhere. Because sending Sputnik into space represented the acme of achievement, there was no question of watering down college offerings, even with hundreds of thousands of new students. Besides, the GI Bill had shown how students from modest or even poor backgrounds had thrived in college. Women too entered universities in larger numbers in the postwar decades and often moved into nontraditional fields. The push for the inclusion of minority students came a bit later, but the post-Sputnik expansion provided the template for that effort. Enlarging higher education put special pressure on graduate programs to prepare more scientists and scholars for faculties all across the country.

  The president of the University of California Clark Kerr played a major role in shaping public opinion. In a famous Harvard lecture of 1964, Kerr laid out a vision of a college education as a general right, not as something reserved for the privileged few. When he was born in 1911, only 5 percent of America’s eighteen-year-olds went beyond high school. Now Kerr insisted that the country must make room for every able student. He also called on universities to turn themselves into multiuniversities, offering a broad range of knowledge, theoretical and practical, ancient and current.26Sputnik acted as a catalyst, but it had also become increasingly obvious that capitalism’s growth was dependent upon engineers, physicists, business experts, and skilled mechanics.

  Responding to this challenge, the California legislature passed the 1960 Master Plan for Higher Education, which developed a three-tiered avenue for students: The top eighth of California’s high school graduates could enter the University of California, the top third of graduates had a guaranteed place in one of the campuses in the state university system, and others could go to community colleges to prepare for later entrance into four-year institutions. Many states followed this model with multiple campuses radiating out from the original state university. In the East, where private education dominated, Massachusetts and New York started their first public university systems.

  Expanding American universities rather than institutes of technology like those in California and Massachusetts, the U.S. government became a patron of the liberal arts as well as of the sciences. This is because in the United States, the first two years of college are dedicated to what is called general education, unlike other national systems, which have students specializing in secondary schools. So along with all the newly minted scientists who found good jobs in higher education there were thousands in literature, philosophy, history, political science, and sociology who did so as well. With tenured positions within the academy, much of the country’s intelligentsia lost the acerbic tone of skeptical outsiders, common in Europe. The economist Joseph Schumpeter feared that capitalism would fail because of its cultural opponents. The American public has resoundingly supported capitalism and its demands on society in part because they have not been exposed to the withering commentary of critics.

  State legislatures and private philanthropists got behind the monumental effort to build university systems by opening up their purses. For that, they expected gratitude from the students. Instead campuses throughout the country and Europe became hotbeds of hotheads. Under the law of unintended consequences, the larger intake of students shaped by a liberal education in a conformist society, as that of the United States was at the height of the Cold War, produced protests and demonstrations over free speech, civil rights, and the war that the United States was fighting in Vietnam. The regents of the University of California removed Kerr in 1967 because of their unhappiness with student activism. By that time he had presided over the expansion of the university to nine campuses. Kerr, who then became head of the Carnegie Commission on Higher Education, commented that he had entered and left office “fired with enthusiasm.”

  The Contribution of German Scientists to American Technology

  Sputnik did more than promote higher education. It turned the exploration of space into a Cold War competition for which Congress obligingly spent billions of dollars. The United States may have demobilized its armed forces quickly, but it retained a major research and development program for new weaponry, as did the Russians. Sputnik, like America’s Explorer, drew upon German wartime developments. These in turn built on the work of America’s Robert Goddard, Russia’s Konstantin Tsiolkovsky, and Germany’s Hermann Oberth. Goddard had succeeded in firing a rocket using liquid fuel in 1926, but this aroused little interest in the United States. Quite the contrary in Germany. A young Wernher von Braun became fascinated by the possibility of space travel through the writings of Jules Verne and H. G. Wells. He joined a rocket society when he was seventeen in 1929 and learned about the work of Goddard, Tsiolkovsky, and, of course, Oberth. Three years later, von Braun entered the army. With a doctorate at age twenty-two he headed up the so-called rocket team that developed ballistic missiles. Nazi propaganda minister Joseph Goebbels named the first model “Vengeance Weapon No. 2.” Von Braun’s V-2 could deliver a two-thousand-pound warhead five hundred miles at a speed of thirty-five hundred miles per hour. Fortunately, it did not become operational until late in 1944.

  But this is where the story of rockets gets really interesting. Although the Germans had relied upon many American patented devices such as gy
roscopic controls, they alone possessed the knowledge of how to make liquid-propelled rockets. This pushed the American and Soviet military into a race to locate and bring back home as many scientists as possible once they entered Germany. Von Braun had seen the end of the war coming and was determined to place his work in the hands of the Western powers. He had actually arranged for the surrender of some five hundred German scientists along with lab papers and testing apparatus. Simultaneously in the summer and fall of 1945, the occupying armies were hunting down former Nazis to bring them to trial for war crimes. And here was the rub. The sought-after scientists were Nazis; no one could have worked on such sensitive programs without joining the party or one of its affiliates. Worse, some of them could also be charged as war criminals since they used slave labor in the Baltic factory that produced rockets.

  The American State Department considered most of the German scientists unsavory applicants for admittance into the United States. A fight with the War Department ensued. The two departments agreed to a compromise to bring a select group of German scientists to the United States for debriefing. This revealed how extensive and profound German science had been during the war, ranging from work on rocketry to studies of the effects of radiation on the human body. The American military wanted these scientists to continue working in the United States, safe from any prospective enemy. “Ardent” became the relevant adjective to disqualify someone from entrance to the United States. Had he been an ardent Nazi? Another compromise was worked out. Only the scientists whose work appeared vital to U.S. interests would be allowed to emigrate. More than a hundred German physicists and engineers passed this screening. They were labeled “paperclip scientists” because the military reviewers had put paper clips on their papers to signify their importance. Lasting into the 1970s, the Paperclip program brought a total of seventeen hundred German scientists to America, where they laid the foundation for the American space program at White Sands, New Mexico, and Huntsville, Alabama.